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Halliburton (HAL) Up 7.7% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Halliburton (HAL - Free Report) . Shares have added about 7.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Halliburton due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Halliburton Q2 Earnings Beat as Both Units Outperform
Halliburton reported second-quarter 2023 adjusted net income per share of 77 cents, surpassing the Zacks Consensus Estimate of 75 cents and well above the year-ago quarter profit of 49 cents (adjusted). The outperformance reflects stronger-than-expected profit from both its divisions.
Meanwhile, revenues of $5.8 billion were 14.3% higher than the corresponding period of 2022 but came below the Zacks Consensus Estimate (by some $49 million) on tepid sales from international regions.
Inside Halliburton’s Regions & Segments
North American revenues rose 11.1% year over year to $2.7 billion, which also exceeded our projection by $42.7 million. Revenues from Halliburton’s international operations were up 17.1% from the year-ago period to $3.1 billion but fell short of our estimate by $48.9 million.
Operating income from the Completion and Production segment was $707 million, up significantly from the year-ago level of $499 million and ahead of our projection of $693.4 million. The division’s performance was buoyed by improving completion tool sales, strength in overseas cementing job and pipeline services, higher stimulation activity and well intervention services in the Gulf of Mexico, along with robust artificial lift activity in North America.
Drilling and Evaluation unit profit improved from $286 million in the second quarter of 2022 to $376 million in the corresponding period of 2023. The division also managed to narrowly beat our estimate of $368.2 million. This was primarily due to a pickup in fluid services, plus drilling-associated services in the Western Hemisphere and Saudi Arabia.
Balance Sheet
Halliburton reported second-quarter capital expenditure of $303 million, slightly higher than our projection of $298.4 million. As of Jun 30, 2023, the company had approximately $2.1 billion in cash/cash equivalents and $7.9 billion in long-term debt, representing a debt-to-capitalization ratio of 47.6. HAL also bought back $248 million worth its stock during the April-June period. The company generated $1.1 billion of cash flow from operations in the second quarter, leading to free cash flow of $798 million.
Management Remarks & Outlook
Halliburton — the world’s biggest provider of hydraulic fracking — noted that the strong second-quarter performance is a thumbs-up to its solid execution and strategic priorities in North America as well as international markets. Looking ahead, the company expects this recipe, and long-term oil and gas demand, to drive a strong and sustained upcycle.
Overall, Halliburton believes that its smart strategy, digital leadership, capital efficiency and global presence point to a rosy outlook. This Houston-based company’s cash flow generation capabilities and balance sheet strength should also ensure increased shareholder returns.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, Halliburton has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Halliburton has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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Halliburton (HAL) Up 7.7% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Halliburton (HAL - Free Report) . Shares have added about 7.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Halliburton due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Halliburton Q2 Earnings Beat as Both Units Outperform
Halliburton reported second-quarter 2023 adjusted net income per share of 77 cents, surpassing the Zacks Consensus Estimate of 75 cents and well above the year-ago quarter profit of 49 cents (adjusted). The outperformance reflects stronger-than-expected profit from both its divisions.
Meanwhile, revenues of $5.8 billion were 14.3% higher than the corresponding period of 2022 but came below the Zacks Consensus Estimate (by some $49 million) on tepid sales from international regions.
Inside Halliburton’s Regions & Segments
North American revenues rose 11.1% year over year to $2.7 billion, which also exceeded our projection by $42.7 million. Revenues from Halliburton’s international operations were up 17.1% from the year-ago period to $3.1 billion but fell short of our estimate by $48.9 million.
Operating income from the Completion and Production segment was $707 million, up significantly from the year-ago level of $499 million and ahead of our projection of $693.4 million. The division’s performance was buoyed by improving completion tool sales, strength in overseas cementing job and pipeline services, higher stimulation activity and well intervention services in the Gulf of Mexico, along with robust artificial lift activity in North America.
Drilling and Evaluation unit profit improved from $286 million in the second quarter of 2022 to $376 million in the corresponding period of 2023. The division also managed to narrowly beat our estimate of $368.2 million. This was primarily due to a pickup in fluid services, plus drilling-associated services in the Western Hemisphere and Saudi Arabia.
Balance Sheet
Halliburton reported second-quarter capital expenditure of $303 million, slightly higher than our projection of $298.4 million. As of Jun 30, 2023, the company had approximately $2.1 billion in cash/cash equivalents and $7.9 billion in long-term debt, representing a debt-to-capitalization ratio of 47.6. HAL also bought back $248 million worth its stock during the April-June period. The company generated $1.1 billion of cash flow from operations in the second quarter, leading to free cash flow of $798 million.
Management Remarks & Outlook
Halliburton — the world’s biggest provider of hydraulic fracking — noted that the strong second-quarter performance is a thumbs-up to its solid execution and strategic priorities in North America as well as international markets. Looking ahead, the company expects this recipe, and long-term oil and gas demand, to drive a strong and sustained upcycle.
Overall, Halliburton believes that its smart strategy, digital leadership, capital efficiency and global presence point to a rosy outlook. This Houston-based company’s cash flow generation capabilities and balance sheet strength should also ensure increased shareholder returns.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed a downward trend in estimates review.
VGM Scores
Currently, Halliburton has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Halliburton has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.